Trump's Push for a Crypto Reserve: Can the US Become the "Crypto Capital"?

Trump's Push for a Crypto Reserve: Can the US Become the "Crypto Capital"?On March 3rd, 2025, former US President Donald Trump announced on his social media platform, TruthSocial, plans to include XRP, Solana (SOL), and Cardano (ADA) in a US cryptocurrency reserve. This move, following his executive order establishing a digital asset task force and preceding a White House crypto summit on March 7th, garnered global attention and triggered significant market volatility

Trump's Push for a Crypto Reserve: Can the US Become the "Crypto Capital"?

On March 3rd, 2025, former US President Donald Trump announced on his social media platform, TruthSocial, plans to include XRP, Solana (SOL), and Cardano (ADA) in a US cryptocurrency reserve. This move, following his executive order establishing a digital asset task force and preceding a White House crypto summit on March 7th, garnered global attention and triggered significant market volatility. What are the motivations behind Trump's actions, and can the US realistically become the "crypto capital" as a result? This article delves into these questions.

Market Turmoil Triggered by Trump's Policy: A Rollercoaster of Euphoria and Panic

Trump's March 3rd statement, outlining plans to incorporate Bitcoin, Ethereum, XRP, Solana (SOL), and Cardano (ADA) into a national reserve framework, ignited the cryptocurrency market. Market capitalization surged by over $300 billion in a single day, with Bitcoin breaking $95,000. Cardano, XRP, and Ethereum saw 24-hour gains of 59.61%, 23.73%, and 9.57%, respectively. A global "policy-driven" rally ensued.

However, this exuberance proved short-lived. Concerns about policy details and implementation, coupled with macroeconomic anxieties stemming from Trump's past tariff policies, quickly reversed investor sentiment. The VIX volatility index climbed, and unease permeated risk asset markets. The brief euphoria gave way to a sharp price drop. Coindesk data showed Bitcoin falling over 9% in 24 hours to $83,986, and Ethereum dropping over 15% to $2056, both below pre-announcement levels by March 4th, 11:30 AM. XRP and Solana almost entirely relinquished their previous two days' gains, and Cardano also gave back most of its surge.

Crypto-related stocks also suffered, with Coinbase and Robinhood falling nearly 5% and 6%, respectively. MicroStrategy's stock, after opening 14% higher, closed down nearly 2%. Market analysts pointed to the lack of clarity surrounding Trump's plans for the crypto reserve. Any divergence between expectations and reality could lead to further significant market declines. Furthermore, macroeconomic concerns related to trade policies remained unresolved and continued to influence the future trajectory of cryptocurrencies.

Trump's Crypto "Flip-Flop": From Skepticism to Embrace

Trump's stance on crypto underwent a dramatic 180-degree turn. In 2021, he publicly dismissed Bitcoin as a "scam," expressing skepticism and criticism. However, during the 2024 US presidential election, he gained significant support from the crypto industry, leading to a shift in his rhetoric and a proactive embrace of cryptocurrencies.

In mid-September 2024, WorldLibertyFinancial (WLF), a crypto banking platform, was established, encouraging borrowing, lending, and investing in cryptocurrencies and planning to launch its own token, WLFI. After winning the election, Trump swiftly acted to support the industry, signing an executive order on January 23rd to create a Presidential Working Group on Digital Asset Markets to assess the feasibility of establishing a national digital asset reserve and develop a regulatory framework. Prior to this, the Trumps launched their own cryptocurrency. Donald Trump Jr. and Eric Trump's WLF, founded two months before the election, not only issued a "strategic token reserve" but also planned to enter the DeFi (decentralized finance) space, creating synergy with the Trump administration's "deregulation" policies. Furthermore, Trump's attendance at the White House's first cryptocurrency summit on March 7th further solidified his support for the industry.

Multiple Objectives Behind the Strategic Reserve Plan: A Blend of Political, Economic, and Family Interests

Trump's push for a cryptocurrency strategic reserve serves multiple purposes. First, it's a reward to the crypto industry supporters who backed him in the 2024 election, solidifying their allegiance to him and his party. It also acts as a countermove to the Biden administration's crackdown on the crypto industry, aiming to divide the Democratic voter base and gain political capital.

Second, it's an attempt to stimulate economic and financial innovation. By early 2025, the global cryptocurrency market capitalization exceeded $3 trillion. Including Bitcoin and Ethereum in the strategic reserve could give the US a head start in the burgeoning digital finance sector. This would signal positive sentiment, demonstrating US acceptance and support for cryptocurrencies, potentially encouraging larger platforms like Coinbase to expand their US operations and attracting global crypto investors.

Furthermore, Trump's initiative may be designed to address potential future currency diversification trends. As the global economy undergoes digital transformation, the importance of digital currencies is increasing. By including cryptocurrencies in the national strategic reserve, the US could gain a leading position in future digital currency competition.

Finally, the Trump family is closely tied to the cryptocurrency business. Although many retail investors suffered significant losses after the launch of "Trump Coin," nearly $100 million in transaction fees flowed to the Trump family and its partners. If the cryptocurrency strategic reserve plan fuels sustained prosperity in the crypto market, the Trump family's cryptocurrency ventures will also benefit. The Trumps and their businesses are increasingly profiting from the crypto world; besides WLF, they hold a majority stake in Trump Media & Technology Group, which has announced a shift towards crypto-related financial services.

Can the US Become the "Crypto Capital"? Challenges and Constraints Coexist

Despite the fanfare surrounding Trump's crypto strategy, its implementation faces numerous challenges. Cryptocurrency regulation remains a significant unresolved issue. It involves multiple agencies, such as the SEC and CFTC, with overlapping jurisdictions and coordination problems. Past SEC investigations and lawsuits against crypto companies demonstrate the inconsistencies in regulatory attitudes and standards. Without clear and unified regulatory rules, cryptocurrency businesses will face legal risks.

The cryptocurrency market is extremely volatile, as evidenced by Bitcoin's price fluctuationsfalling below $80,000 and then surging past $95,000 within a week due to Trump's announcement. This volatility stems from factors including low liquidity, high speculation, and imperfect market mechanisms. Market instability and security concerns could erode investor confidence, hindering the US's ability to attract global crypto investors and businesses. Moreover, the crash of "Trump Coin" and the speculative nature of WLF tokens have undermined institutional investors' confidence in policy stability.

Ma Tianping, a researcher at the Tsinghua University PBC School of Finance, notes that within the dollar system, cryptocurrencies remain a special commodity, essentially indistinguishable from ordinary goods in terms of monetary attributes. Operationally, incorporating cryptocurrencies into a national strategic reserve presents significant technical challenges. Given the potential systemic risk that crypto assets pose to financial stability, global regulatory efforts are intensifying. According to the 2024 People's Bank of China's "Financial Stability Report (2024)," 51 countries and regions had already implemented bans on crypto assets by the end of 2024, and some economies had adjusted existing laws or enacted new legislation to regulate them.

In conclusion, the success of Trump's proposed cryptocurrency strategic reserve hinges on effectively addressing regulatory challenges, stabilizing market volatility, and navigating the increasingly stringent global regulatory landscape for crypto assets. Whether the US ultimately becomes the "crypto capital" remains to be seen.